Pinterest valued at $12.7 billion in IPO

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Pinterest Inc's initial public offering set the online scrapbook company's valuation at 12.7 billion U.S. dollars on Wednesday, above its expectations and a sign of strength for the tech IPO market after Lyft Inc's struggles.

Pinterest, where users save ideas for clothes, décor and recipes, is due to start trading on the New York Stock Exchange on Thursday. Its performance will be a key test of the tech IPO market after the Nasdaq debut of ride-hailing start-up Lyft at the end of last month.

Lyft raised more than it had set out to do when it went public, but shares have dropped around 17 percent from its IPO price.

A key difference between Pinterest and Lyft were their valuation expectations. Lyft, which lost 911 million U.S. dollars last year, was seeking a valuation of up to 24.3 billion U.S. dollars in its IPO, higher than the 15 billion U.S. dollars valuation it attained in its latest private fundraising round in 2018. Pinterest lost 63 million U.S. dollars in 2018.

Pinterest's initial 15-17 U.S. dollars per share target range had set it on course to be valued below its last private fundraising valuation of 12.3 billion U.S. dollars in 2017.

At 19 U.S. dollars per share, Pinterest, which offers advertisers a venue to sell to consumers, raised around 1.4 billion U.S. dollars at a roughly 12.7 billion U.S. dollars valuation.

Pinterest is also the most high-profile listing of a U.S. social media company since Snap Inc in 2017. Snap's stock also priced well in its IPO but is now down more than 30 percent below its IPO price.

Investors in IPOs typically expect new companies to outperform the broader market. Renaissance Capital's IPO exchange traded fund is up 30 percent so far in 2019, compared with a 15.7 percent rise in the benchmark S&P 500 Index.

IPOs of Pinterest and other such loss-making unicorns - startup companies with valuations of at least one billion U.S. dollars - have presented a predicament for investors sitting on the fence. They do not want to miss out on popular companies with fast growth, but at the same time have to weigh the risks of businesses with unproven economics.

Pinterest will trade under the symbol "PINS". Goldman Sachs & Co LLC, JPMorgan and Allen & Company are the lead underwriters on the Pinterest IPO.

Source(s): Reuters